Disclosure – Honesty is the best policy

We recently had a client come to us for Private Underwriting. For those that are unfamiliar, this is where clients use our own underwriting team to collect everything an insurance company would collect to assess risk. The difference being that we do it independent of the insurance carriers so we can ensure accuracy, context and even identify problem area that will negatively impact the rates and performance of the insurance contract. It gives us an chance to work on those areas to improve the potential insurance carrier offer.

We always conduct a preliminary assessment which is essentially a medical intake interview. Once all the information was collected and reviewed we gave our preliminary assessment of standard risk based on the information provided. We proceeded to collect all the medical history, doctors’ reports, labs etc. One of the reports revealed a much more serious condition which the client did not disclose. And frankly, it was deliberately not disclosed.

Here’s the problem. Had this client gone directly to an insurer, they would have been declined outright. Why? For non-disclosure. Insurance carriers are going on the hook for a large amount of risk on a good faith basis. Their position is that if a client is lying about this one issue, what else are they hiding. It’s not worth the risk and the potential of future litigation at claim time. So a decline is most common.

So how did we get this person standard coverage? A couple reasons. First is that the info came to us first. Not the insurer. We were able to flag the issue and have a frank conversation about non-disclosure. They acknowledged that they did not feel this was relevant because the condition was asymptomatic. We explained that it is critical to disclose everything you can remember. Not only do we want accuracy in the file but the worst case scenario is that this comes out at claim time and jeopardizes the contract altogether.

The second reason we got standard coverage is that this client was applying for joint last coverage with his spouse. What they didn’t know is how little the underwriting on him impacted the final rate. Even with full disclosure, the result would have been the same.

So the moral of the story is that honesty is the best policy. Understand the impact of your entire medical history and ensure you have good representation.